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A continuous steam sterilization unit capable of producing shelf-stable aseptically processed particulate foods of high quality has been developed. The system utilizes steam as the heating medium to achieve better heat transfer and segmented-flow technology to produce a smaller residence time distribution than pipe-flow aseptic processing. Foods are processed only as long as needed to achieve the proper microbiological lethality, and are not overcooked. A direct-contact, gravitational counter-flow chilled water system cools particles following sterilization. Vacuum hydrated mushrooms were tested, without using the blanching step required for canning. The continuous steam sterilization process produced a visibly superior product compared to canned mushrooms.